1. Can you help me find the right lot?
Absolutely! If you don’t already own a lot, we will help you find the right lot at the right price. To help you make a sound decision, we will walk the lot of your choice with you. We will discuss the specific location of the lot within the subdivision, the types of soil on the lot, any potential grading or drainage issues, the optimum position of your home on the lot, and a host of other considerations. Because of our building experience, we will be able to help you choose the best lot for your particular situation.
2. I want a new home, but I don’t want to wait months for it to be built. Can you help me?
Certainly! We are building new homes all the time, and may have exactly what you are looking for newly built or nearly completed.
3. Can you help with design?
Yes, We direct you to our architects partners to help you choose the best plan or to custom design a plan that’s right for you.
4. Are your homes inspected?
Yes—multiple times. County inspectors visit the construction site at different stages and make sure the construction meets code specifications. We work closely with these inspectors to assure that your home is built right the first time. Builders who don’t comply with code face fines and construction can be halted until the problem is remedied.
5. How do banks handle the construction loan?
Construction loans differ from mortgages because the lender has to understand and approve the construction plans before it lends money to the borrower.
There are different options regarding the loan when building a home. Some people prefer to obtain a construction-to-permanent loan. Under this scenario, you may only go through one closing and the lender may allow you to lock in your rate. Be sure you research several banks and obtain estimates on both the construction loan and the final mortgage interest rates.
Under a construction-to-permanent loan, the construction loan converts into a standard loan by the same lender, once the borrower has a certificate of occupancy. This saves time and money since the borrower only has to fill out one mortgage application and close once. (The borrower typically is asked to sign the necessary mortgage documents, in a closing-like setting, once the construction is complete and the occupancy permit has been issued by the county after its final inspection.)
We have worked extensively with construction financing and will help you at every step in the process.
6. How long does it take you to build my home?
Usually six months to a year, but the time it takes to build your home depends on variables such as square footage, design, time of year, weather, etc. For example, a wet summer can keep the builder from pouring the foundation, which can hold up the process for months. On the other hand, once your home’s foundation is poured and the roof is installed, weather becomes much less a factor.
Completing the interior of your home is a slower process due to the interdependence of sub-contractors, such as electrical, plumbing, heating, etc. Certain subcontractors must finish their work before other subcontractors may start their portion of your home’s construction. The exterior of your home can typically move forward much faster than finishing the interior of the home.
7. I am building within a subdivision. What do I need to know before signing the contract?
Building within a new subdivision protects your investment by providing comparably valued homes around you. In addition, every homeowner within the subdivision will be subject to Covenants and Restrictions, as well as a Homeowner’s Association to maintain a certain “look” and standard of quality for that subdivision. The covenants and their restrictions help protect and improve the value of the investment you make in your home, but they limit some of your choices in design and construction. Be sure that you read these restrictions carefully before signing.
8. What do I need to know about buying land?
Buying land is not much different from buying other property, except that banks may not readily lend money for the purchase of raw land. If you do not have the cash to buy the land, your seller may be willing to carry a note. This note can be paid off when your construction loan is approved.
You may also check with local banks, if you are buying acreage in the country. Often local banks are more likely to provide loans for the purchase of raw land in the community they serve.
Your purchase contract for raw land should always include a due diligence contingency, which allows you to bring your builder and have the soil tested. If a septic system is required, the soil will need to allow for drainage. Some sites contain a thin layer of soil over granite or some other type of rock. This could make it necessary for the rock to be removed, and that could be costly. Some sites are subject to environmental considerations that could make construction expensive or impossible.
9. Who controls the funds of the construction loan and how are they paid out?
The bank controls the funds of the construction loan. Those funds are not paid out all at once. Borrowers usually get between five and ten “draws” which coincide with certain stages of construction such as:
1. pouring the foundation
3. installing heating and cooling systems, wiring, and plumbing systems
4. installing cabinets, flooring and fixtures
5. finishing work such as painting, carpeting, etc.
Construction loans are short-term loans and are converted or replaced by a standard mortgage once construction is finished. Some people get a construction loan to cover only the building of the home and reserve the option to shop for another lender and lower rate to cover their mortgage.
The bank typically has an inspector visit the construction site periodically, to ensure the construction is meeting expectations before releasing additional funds. The builder requests a draw in advance of each new construction phase. The bank typically issues a checkbook, to allow the Homeowner to pay the builder during each building phase.
10. Do I need to get a construction loan to have a home built?
Not always. In some cases we (Huios) can use our funds to construct your home. In these cases, you purchase the finished home from Huios with conventional financing options.